Business Ethics And Emotional Intelligence – CMA Inter Law and Ethics Study Material

Business Ethics and Emotional Intelligence – CMA Inter Business Laws and Ethics Study Material is designed strictly as per the latest syllabus and exam pattern.

Business Ethics and Emotional Intelligence – CMA Inter Law and Ethics Study Material

Short Notes

Question 1.
Write a qualitative note on ‘ethics philosophies’. (Dec 2012, 5 marks)
Answer:
The following are some of the ethics philosophies:
1. Deontological ethical theory
The word ‘deontological’ is derived from the Greek word “Deon” meaning ‘duty’ or ‘obligation’. Deontological theories focus on certain fundamental duties that we have as human being, such as not committing murder or theft. The duties stress that rightness of an act is derived from some feature of the action itself, with reference to its consequences.

The duties upheld by deontological theory may be classified under three headings:

• Duties to God, including honoring him and praying to him.
• Duties to Oneself includes preserving ones life and sharing happiness.
• Duties to others, including family duties, social duties and political duties.

Teleology (Greek : telos: end, purpose) Is the philosophical study of design and purpose. It states that everything that exists in the universe has a particular purpose. A teleological school of thought is one that holds all things to be designed for or directed toward a final result, that there is an inherent purpose or final cause for all that exists.

3. Utilitarianism
The idea that the moral worth of an action is solely determined by its contribution to overall utility, that is, its contribution to happiness or pleasure as summed among all persons. It can be described by the phrase “the greatest good for the greatest number”. For example, one may be tempted to steal from a rich person to give to a starving family.

4. Relativism
This states that everything related to ethics is relative in nature and should be seen with that frame of reference. Something good to somebody may be very bad for somebody else. Killing an enemy on border is good for the nation but it is very bad for the family of the enemy. The idea that some elements or aspects of experience or culture are relative to i.e., dependent on, other elements or aspects. The term often refers to truth relativism, which is the doctrine that there are no absolute truths, i.e., that truth is always relative to some particular frame of reference, such as a language or a culture.

5. Justice
The concept of rare rightness in action or attitude is closely linked to fairness. A conception (means idea, notion or beginning) of justice is one of the key features of society.

Question 2.
Write short note on the following:
Seven principles of Public Life (June 2017, 5 marks)
Answer:
Seven Principles of Public Life
The Seven Principles of Public Life were set out by Lord Nolan for the first time in the year 1995. These principles of public life will apply to anyone who works as a public office holder, including elected and appointed to public office either locally or nationally. These principles apply to civil service, local.

government, the police, the Courts and probation of services, non-departmental public bodies, health, education, social are care services. These principles also apply to other sectors that delivers public services.

The British Government appointed a committee called as Committee on Standards in Public Life to advise the Prime Minister on ethical standards of public life. The Committee was established in October 1994.

The term of reference to the committee is:
to examine current concerns about standards of conduct of all holders of public office, including arrangements relating to financial and commercial activities; and

to make recommendations as to any changes in present arrangements which might be required to ensure the highest standards of propriety in public life.

The Committee submitted its first report in the year 1995 containing the seven principles of public life. The said principles have been amended over year. The seven principles of public life as amended up to and as on 2015 are as follows:

Selflessness – Holders of public office should act solely in terms of the public interest.

Integrity – Holders of public office must avoid placing themselves under any obligation to people or organizations that might try inappropriately to influence them in their work. They should not act or make decisions in order to gain financial or other material benefits for themselves, their family, or their friends. They must declare and resolve any interests and relationships.

Objectivity – Holders of public office must act and make decisions impartially, fairly, and on merit, using the best evidence and without discrimination or bias.

Accountability – Holders of public office are accountable to the public for their decisions and actions and must submit themselves to the scrutiny necessary to ensure this.

Openness – Holders of public office should act and make decisions in an open and transparent manner. Information should not be withheld from the public unless there are clear and lawful reasons for so doing.

Honesty – Holders of public office should be truthful
Leadership – Holders of public office should exhibit these principles in their own behavior. They should actively promote and robustly support the principles and be willing to challenge poor behavior wherever it occurs.

Question 3.
Write short note on the following term:
Business Ethics (Dec 2017, 5 marks)
Answer:
Meaning
Business ethics deals with morality in the business. It is a system of moral principles and values applied to business activities. This means the business activities should be conducted according to ethics or moral standards.

Definition
Business ethics is an art or science of maintaining harmonious relationships with society, its various groups and institutions as well as reorganizing for right or wrong of business conduct.

Features of business ethics

• Code of conduct;
• Provide protection to social groups;
• Provide basic framework;
• Need willing acceptance;
• Education and guidance;
• Not against for-profit making.

Principles

• Avoid exploitation of consumers;
• Avoid unfair trade practices;
• Fair treatment to employees.

Importance

• Improving consumer confidence
• Business become conscious of social responsibilities;
• Create good image of business;
• Goodwill;
• Profitability;
• Survival of heated competition
• Safety from legal perspectives

Question 4.
Write short note on out of the following term:
Consumer movement and Ethics. (June 2018, 5 marks)
Answer:
Consumer movement
Business ethics is gaining importance because of the growth of the consumer movement. Gone are the days when the consumer can be taken for ride by the unscrupulous business by their false propaganda and false claims, unfair trade practices. Today, the consumers are aware of their rights and well informed as well as well organized. Now they are more organized and hence cannot be cheated easily.

They take actions against those businessmen who indulge in bad business practices. They boycott poor quality, harmful, high priced and counterfeit goods. Therefore, the only way to survive in business is to be honest and fair. Consumer forums and consumer associations are more active and vocal now.

Question 5.
Write short notes on:
Improving ethical behaviour in business (Dec 2018, 5 marks)
Answer:
Improving ethical behaviour in business
Understanding how people make ethical choices and what prompts a person to act unethically may reverse the current trend toward unethical behaviour in business.

Ethical decisions in an organization are influenced by three key factors:
individual moral standards, the influence of managers and co-workers, and the opportunity to engage in misconduct.
It is difficult for employees to determine what conduct is acceptable within a company if the firm does not have ethics policies and standards.

And without such policies and standards, employees may base decisions on how their peers and superiors behave. Professional codes of ethics are formalized rules and standards that describe what a company expects of its employees.

Codes of ethics, policies on ethics, and ethics training programs advance ethical behavior because they prescribe which activities are acceptable and which are not, and they limit the opportunity for misconduct by providing punishments for violations of the rules and standards.

The enforcement of such codes and policies through rewards and punishments increases the acceptance of ethical standards by employees.

Question 6.
Write short flotes on:
importance of ethics (June 2019, 5 marks)
Answer: .
Importance of Ethics:
Ethics is a requírernent for human life. It is our means of deciding a course of action. Without it, our actions would be random and aimless.

There would be no way to work towards a goal because there would be no way to pick between a limitless number of goals.

Even with an ethical standard, we may be unable to pursue our goals with the possibility of success.

To the degree which a rational ethical standard is taken, we are able to correctly organize our goals and actions to accomplish our most important values.

Any flaw in our ethics will reduce our ability to be successful in our endeavors.

A proper foundation of ethics requires a standard of value to which all goals and actions can be compared to.

This standard is our own lives and the happiness which makes them liveable. This is our ultimate standard of value, the goal in which an ethical man must always aim.

It is arrived at by an examination of man’s nature, and recognizing his peculiar needs. A system of ethics must further consist of not only emergency situations but the day-to-day choices we make constantly.

It must include our relations to others, and recognize their importance not only to our physical survival, but to our well-being and happiness, It must recognize that our lives are an end in themselves, and that sacrifice is not only not necessary, but destructive.

Question 7.
Write short note on the following term:
Advantages of Business Ethics (Dec 2019, 5 marks)
Answer:
Advantages of Business Ethics:

• Business ethics deals with morality in the business. It is a system of moral principles and values applied to business activities.
• This means the business activities should be conducted according to ethics or moral standard.
• Business ethics is an art or science of maintaining harmonious relationships with society, its various groups and institutions as well as reorganizing for right or wrong of business conduct.

The following are the advantages for following the principles of business ethics:

• It offers a company a competitive advantage;
• Goodwill of the firm hikes depending on its responds towards its ethical issues;
• Productivity through rigid, firm, and sincere workers as well as other business chain members;
• Through increasing morale and trust business can increase their market share;
• Publicity due to well and ethical performance;

Question 8.
Write Short Notes on Types of Ethics (Dec 2021, 3 marks)
Answer:
Type of ethics
Ethics may be divided into three types as follows:

1. Metaethics: Meta-ethics deals with the nature of moral judgment. It looks at the origins and meanings of ethical principles.
2. Normative ethics: Normative ethics is concerned with the content of moral judgments and the criteria for what is right or wrong.
3. Applied ethics: Applied ethics looks at controversial topics like wàr, animal rights and capital punishment.

Question 9.
Write short note on the following terms:
Improving ethical behaviour in business (Dec 2022, 5 marks)

Distinguish Between

Question 10.
Answer the question:
(i) What is the difference between morals and ethics? (Dec 2016, 7 marks)
Answer:
First of all analysis of the key terms ‘ethics’ and ‘morals’ is to be done. The linguistic use of the terms, they seems as if they are in the plural form, just as ‘economies’ or ‘polities’, but we treat them as singular. Generally, ethics and morals are used as synonyms. There is nothing wrong in such a usage, for, after all, the meanings of all words depend on their common usage.

However, in formal study, we need to understand the meaning of the terms in a qualified way so as to make our subject of study precise and well-defined.

Meaning:
The terms ‘ethics’ and ‘morals are etymological, that is, from their very roots or terms, different. The word moral(s) is derived from the Latin root moralis, which implies custom. In other words, it refers to a behavior that is accepted or rejected due to an accepted social custom. The word ethics stems from the Greek word ethic, which is attributed to a social environment, referred to as ethos or social milieu. This latter meaning embraces much more than mere custom. It refers to everything that is part and parcel of society and not just what is allowed or forbidden. Morality is more concerned with the norms, values, and beliefs embedded in social processes which define what is right or wrong for an individual or community.

Another point of difference between the two refers to their usage in ordinary language. For instance, a lawyer defending an alleged rapist would accuse ‘the victim as ‘morally fallen’ and not as ‘ethically fallen’. On the other hand, a committee that is formed to probe the behavior of the members of Parliament would be called ‘ethics committee’ not ‘moral committee’. The meaning of the word is in its usage. Thus, both these terms have their unique characteristics and applications.

Usage:
However, the terms are intrinsically not different. Both of them refer to the same reality of human actions, which may be characterized as morally or ethically positive or negative as the case may be. It may be true that the terms (ethics and morals) sound different but they refer to the same social reality wherein a certain body of accepted norms forms a code of conduct in society. The actions of the members are described as ‘moral’ or ‘ethical’ depending on the linguistic nuances of the meaning in a particular case as well as on the conventional use of the terms. it is in the use of the words in a given context, that the meaning becomes clear.

In academic usage, however, moral behavior refers to a concrete behavior such as showing respect to elders. Ethics, on the other hand, is used to mean a discipline or a systematic study of moral behavior such as justice.

People’s behavior in a society can be morally characterized in their day-to-day actions. It is in the classroom that we analyse the ethical significance of these actions.

These terms are generally interchanged with one and the same meaning, that is, to determine whether some human action is right or wrong. They deal with the application of a socially accepted code of conduct. This conduct may be termed as either moral conduct or ethical conduct.

Descriptive Questions

Question 11.
(a) “The integrity pact (IP) is a tool aimed at preventing corruption in public contracting.” Discuss.
(Dec 2012, 6 marks)
(b) Discuss briefly the following: .
(iv) Ethics in compliance. (Dec 2012, 3 marks)
Answer:
(a) Developed by Transparency International (TI), the Integrity Pact (IP) is a tool aimed at preventing corruption in public contracting. It consists of a process that includes an agreement between a government or a government department and all bidders for a public contract.

It contains rights and obligations to the effect that neither side will; pay, offer, demand or accept bribes, collude with competitors to obtain the contract; or engage in such abuses while carrying out the contract. The IP also introduces a monitoring system that provides for independent oversight and accountability.

(b) Ethics in compliance:
Compliance is about obeying and adhering rules and authority. The motivation for being compliant could be to do the right thing out of the fear of being caught and punished rather than a desire to be abiding by the law.

An ethical climate in an organization ensures that compliance with law is supported by a desire to abide by the laws. Organizations that value high ethics comply with the laws not only in letter but go beyond what is stipulated or expected of them.

Question 12.
You are the Company Secretary of Innovative Products Ltd. The Board of Directors desires to know the advantages of business ethics. Draft a note for consideration of the Board of Directors. (Dec 2012, 5 marks)
Answer:
Advantages of Business Ethics:
Adherence (means loyalty, faithfulness, observance) to a Code of Conduct offers the following advantages:

1. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
2. Full, fair, accurate, timely, and understandable disclosure in reports and documents that a company files with, or submits to the commission and in other public communications made by the company;
3. Compliance with applicable governmental laws, rules, and regulations;
4. The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code, and;
5. Accountability for adherence to the code.

Question 13.
(a) Bhagavad Gita teaches that “without being attached to the fruits of activities, one should act as a matter of duty, by working without attachment one attains the supreme.” In the light of this statement, discuss various ethics philosophies (June 2013, 6 marks)
Answer:

Ethics Philosophies	Bhagavad Gita teaches the following: “That, without being attached to the fruits of activities, one should act as a matter of duty, by working without attachment one attains the Supreme. This flows from the concept Karma. The concept of Karma is close to the notion of deontological ethics.
Deontological Ethics	Emphasizes on the relationship between duty and the morality of human actions. Deontology (Greek deon, “duty”, and logos, “science”) is, therefore, science of duty. In deontological ethics an action is considered morally good because of some characteristic of the action itself, not because the consequence of the action is good. When we fail to follow our duty, we are behaving immorally.

The other ethical philosophies include:

Teleological Ethics	(Derived from the Greek word ‘telas’ meaning end, purpose) is an ethical theory that holds that the ends or consequences of an act determine whether an act is good or evil. Rightness of actions is determined solely by the good consequences. It is also known as consequential ethics.
Enlightened Egoism	(From Latin ego, “la), in philosophy, an ethical theory holding that the good is based on the pursuit of self-interest. This model takes into account harms, benefits and rights for a person’s own welfare. Under this model an action is morally correct if it increases benefits forth individual in a way that does not intentionally hurt others, and if these benefits are believed to counterbalance any unintentinal harms that ensue.
Utilitarianism	Is an ethic of welfare. It is the idea that the moral worth of an action is solely determined by its contribution to overall utility, that is, its contribution to happiness or pleasure as summed among all persons. It can be described by the phrase “the greatest good for the greatest number”.
Relativism	Holds that there are no absolute truths in ethics and that what is morally right or wrong varies from person to person or from society to society. The term often refers to truth relativism, which is the doctrine that there are no absolute truths, i.e., that truth is always relative to some particular frame of reference, such as a language or a culture.
Virtue Ethics	Theory is a branch of moral philosophy that emphasizes character, rather than rules or consequences, as the key element of ethical thinking.
Justice	Is the concept of moral rightness in action or attitude; it is closely linked to fairness. A conception of justice is one or the key features of society.

Question 14.
“Good business ethics promotes good business” – Explain. (Dec 2013, 4 marks)
Answer:
In general the ethics is concerned with doing the right thing. The ethics covers the understanding and analysis of right and wrong, good and bad or evil.

There is a prowing realization all over the world that ethics is vitally important for the survival and growth of any business and for the progress of any society.

Ethics leads to an efficient economy; ethics alone, not government or laws, can protect society; ethics is good in itself; ethics and profits go together in the long-run.

An ethically responsible company is one which has developed a culture of caring for people and for the environment; a culture which flows downwards from the top managers and leaders.

Adopting ethical behaviour in an organization not only increases and enhances its goodwill but also leads to positive consequences in the long run. Business ethics protects the interest of all stakeholders.

Businessman who follows business ethics improves his self-image, gets self-satisfaction and motivates others also to follow the same principles.

So in the era of global economy, for a successful business one has to follow sound ethical practices. Ethics are important not only in business but in all aspects of life because it is an essential part of the foundation on which civilized society is built.

A business or society that lacks ethical principles is bound to fail sooner or later. An organization that has a strong ethical program in place will certainly help in reducing the burden on the employees while deciding on some alternatives, Ethics helps employees in developing a rationale behind the actions that they undertake ¡n the efficient performance of their duties.

It will certainly help in reducing unnecessary tensions and unavoidable thoughts that an individual gets surrounded with when he is faced such kind of problems. This helps him in concentrating more on his work and less on the indecisive thoughts that corrupt his mind.

Question 15.
“Ethics and morals are one and the same” – Comment. (Dec 2013, 3 marks)
Answer:
The word ethics is derived from the Greek word ‘ethics’ meaning character is essence of behaviour while the word Moral is derived from Latin ‘mos’ which means customs.

These two words are fundamentally different and provide two very different standards for defining what is right and what is wrong.

Character is a personal attribute while custom relates to a group of people. People have character while societies have customs. Moral refers to a behaviour that is accepted or rejected due to an accepted social custom. The word ethics embraces much more than mere custom.

It refers to everything that is part and parcel of society and not just what is allowed or forbidden.

Morality is more concerned with the norms, values, and beliefs embedded in social processes which define what is right or wrong for an individual or community.

Another point of difference between the two refers to their usage in ordinary language. For instance, a lawyer defending an alleged rapist would accuse the victim as ‘morally fallen’ and not as ‘ethically fallen’.

On the other hand, a committee that is formed to probe the behaviour of the members of Parliament would be called ‘ethics committee’, not moral committee.

The meaning of the world is in its usage.
Thus, both these terms have their unique characteristics and applications.
However, both the terms refer to human actions, which may be characterized as morally or ethically positive or negative as the case may be.

It may be true that the terms (ethics and morals) sound different but they refer to the same social reality wherein a certain body of accepted norms forms a code of conduct in society.

The actions of the members are described as “moral” or “ethical” depending on the context in which the term is used.

Question 16.
“Business Ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed”. Explain. (June 2014, 4 marks)
Answer:
Business Ethics also called Corporate Ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment.

It applies to all aspects of business conduct and is relevant to the conduct of individuals and the entire organisations.

Business ethics takes into account the social principles of the situations in which business takes place. No matter how hard one tries, it is impossible to separate life from business. For a businessman, business is life. Mahatma Gandhi (1948) said, ‘It is difficult but not impossible to conduct strictly honest business.

What is true is that honesty is incompatible with amassing of large fortune’. The business world is an important part of society, as it is concerned with the livelihoods of people.

Business activity too is subjected to the code of conduct without any exception. People expect businessmen to possess the same rationality as any other citizen. Therefore, there is no separate business ethics for businessmen, as ethics applies to all the activities of people. Consequently, we have to keep business within the bounds of ethics.

Question 17.
Explain the interface between Ethics and Laws. (June 2014, 3 marks)
Answer:
Ethics and Law: The Interface Law is application of ethics into social and personal Life. All laws are subordinates to ethical values but all ethics may not be covered by law. Law has a mandatory outside force behind it while ethics has moral force inside the person.

Law is objective while ethics ¡s subjective. What is ethical for one person may not be ethical for some other person where as law has to be same for all the persons.

Perhaps the best way of visualizing ethics and law is in terms of two intersecting domains as depicted in the following figure:
Thus, in one sense, business ethics can be said to begin where law ends. Business Ethics is primarily concerned with those issues not completely covered by law, or where there is no definite consensus on whether something is right or wrong. Hence, it is often remarked, that business ethics is about the ‘grey areas of’ business where values are in conflict.

Question 18.
(i) “Ethics are desirable for every business.” Comment. (Dec 2014, 5 marks)
(ii) Explain the concept of value-free ethics. (Dec 2014, 3 marks)
Answer:
(i) Need for Business Ethics:
Business ethics is currently a very prominent business topic and the debates and dilemmas surrounding business ethics have attracted enormous amount of attention from different quarters of organizations and society. Hence, it has emerged as an increasingly important area of study. Some of the major reasons why a good understanding of business ethics is important can be stated as follows:

Stop business malpractices	Some unscrupulous businessmen do business malpractices by indulging in unfair trade practices like black-marketing, artificial high pricing, adulteration, cheating in weights and measures, selling of duplicate and harmful products, hoarding, false claims or representations about their products, etc. These business malpractices are harmful to the consumers. Business ethics help to stop these business malpractices.
Improve customers’ confidence:	Business ethics are needed to improve the customers’ confidence about the quality, quantity, price, etc. of the products. The customers have more trust and confidence in the businessmen who follow ethical rules. They feel that such businessmen will not cheat them.
Survival of Business	ethics are mandatory for the survival of business. The businessman who do not follow it will have short-term success, but they will fail in the long run. This is because they can cheat a consumer only once. After that, the consumer will not buy goods from that businessman. He will also tell others not to buy from that businessman.
Safeguarding Consumer rights	sovereignty cannot be either ruled out or consumers’ denied. Business can survive so long it enjoys the patronage of consumers. The consumer has many rights such as right to health and safety, right to be informed, right to choose, right to be heard, right to redress, etc. But many businessmen do not respect and protect these rights. Business ethics are a must to safeguard these rights of the consumers.
Protecting employees and shareholders:	Business ethics are required to protect the interests of employees, shareholders, competitors, dealers, suppliers, etc. It protects them from exploitation through unfair trade practices.

(ii) Value-free Ethics:
It would seem that business is an ethically neutral or value-free activity. In other words, the only value business is concerned with is the monetary value.
It is not in the interest of business to mix ethical values. An ancient Arabic wisdom states, ‘Live together like brothers and do business like strangers.’
Businesses should be kept free from other social relationships and obligations.

• The only successful relationship that exits in business is that of a vendor and a customer.
• It is also said that ‘for the merchant, even honesty is a financial speculation.’
• Indeed, for a businessman, every factor in the business is measured in terms of money.
• The volatility that we see in the stock market is a clear example of the speculative nature of business, which is directly proportional to the prevailing attitude of the people.

Concept of Value-free Ethics:
Nowadays, we are familiar with ‘sugar-free’ soft drinks, ‘caffeine-free’ coffee, and ‘alcohol-free’ beer. The concept of ‘value-free’ business ethics appears to be quite appealing to businessmen. It is as though it may be pursued devoid of all rules within a social vacuum.

The concept of value-free ethics found application in economics in a rather ironic fashion. Ludwig von Mises known as the father of the Austrian School of Economics, proposed the pure theory of economics, stating that economic concepts are a priori, that is, they are not dependent on experience but are purely virtual concepts.

The concept of choice, for instance, is a pure concept. It is immaterial whether one chooses water or wine, but the concept in itself is free of such particular elements.

Hence choice is value-free (wertfrei). Applied to ethics, it would mean that we should be able to study the principles of this discipline, such as goodness, truth, justice, honour, etc. in their pure form.

Question 19.
Explain’ Business ethics as professional ethics. (Dec 2014, 4 marks)
Answer:

• Just as a society functions on the social codes of conduct and a country is governed by its constitution, a business is run on corporate codes.
• In other words, there is a professional code of conduct for any business.
• These codes keep evolving as other things around evolve and develop.
• Therefore, not only should business be defined within the confines of ethics, but it should be practiced strictly under its own professional code of conduct.
• This distinction helps to orient the general principles of ethics and business to a particular activity.
• The principles, however, do not change.

Ethical behaviour is particularly important to professions and to business:
It matters to the professions because the complexity of what they do means that there has to be trust by the user in what they do, or they have no purpose.

It matters to business because investors will not back a company that will not report fairly and customers, increasingly, will not buy from a business that is not acting in the wider interests of society. Deciding what is the right thing to do can be challenging.

We all face numerous personal, social, and organizational pressures which influence our decisions and actions. Sometimes it is easy to assume that compliance with legislation, regulations and policies and procedures equates to doing the right thing. By its nature, a compliance approach to decision-making cannot cover all types of situations and eventualities.

Even when a specific circumstance is addressed by a rule, compliance is often with the letter of the rule, not its spirit. What is needed is a principles-based approach to decision-making, which encourages deliberation, judgment, and responsibility.

The character of a true professional remains undivided, whether at work or at home. Our roles may change from time to time and from place to place but the integrity of our character should be maintained.

Business ethics, thus, professionally adheres to a code of conduct that is in accordance with the normative principles
Further, it may be concretely stated that professionals bear the following marked characteristics:

• competency of educational qualification,
• professional skills, and
• compensation (salary/ remuneration, etc.).

Question 20.
Answer the questions:
(a) (i) ‘The ethics of business is the ethics of responsibility. The businessman must promise that he will not harm knowingly’. Explain. (June 2015, 4 marks)
(b) (i) Explain Ethics as a principle. (June 2015, 4 marks)
(c) (i) What are the seven principles of Public life? Explain. (June 2015, 4 marks)
Answer:
(a) (i) Over a period of time, business has developed a code of conduct that creates greatest good and least harm to its pillars of support viz. customers, employees, shareholders and community. Apparently, there is a contradiction between ethics and motive of profit. It is now well accepted a fact that ethical behavior creates a positive reputation that expands the opportunities for profit. A business is not restricted to its various assets viz. Building, Machine, and Working Capital only but is having a vision and a role, present or prospective to play in the society. To achieve such goal it needs to make a number of sacrifices and take responsibilities such as:

• Creation of awareness within the organization how its products and services are accepted to the consumer, the industry, and the society at large.
• Sacrifice a part of profit to satisfy legal or other commitments for corporate social responsibility.
• An organizational culture most likely to encourage high ethical standards of risk tolerance, control, and conflict tolerance.
• Spend on research and other innovations for protecting environmental needs to carry out business /industrial operations.

(b) (i) Ethics as a Principle:
We have established that social evolution has developed definite principles of civic behaviour, which have attained the status of principles. By principle, we understand that something proceeds and depends on it for its cause. For instance, when one kicks a football, force is the principle that propels it into motion and the ball remains in motion till the force lasts.

In other words, the physical world functions strictly according to the laws of physics.
It is expected that people also submit their behavior, both in thoughts and in actions, to these principles.
An action is valid as long as it reflects the principle, just as the speed of the moving ball depends on the force it receives.

(c) (i) The Seven Principles of Public Life.

Selflessness	Holders of public office should take decisions solely in tells of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends.
Integrity	Holders of public office should not place themselves under any financial ór other obligation to outside individuals or organizations that might influence them in the performance or their official duties.
Objectivity	In carrying out public business including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit.
Accountability	Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office.
Openness	Holders of public office should be as open as possible about all the decisions and actiot that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands.
Honesty	Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest.
Leadership	Holders of public office should promote and support these principles by sound leadership and prove to be an example in whatever they perform.

Question 21.
Answer the questions:
(a) (i) ‘The terms ethics and morals are etymologically different’. Explain. (Dec 2015, 3 marks)
(b) (i) State the evolution of ethics. (Dec 2015, 3 marks)
(c) (i) ‘Fairness and honesty are the pillars of success in business’. Comment. (Dec 2015,4 marks)
Answer:
(a) (i) Meaning:

• The terms ‘ethics’ and ‘morals’ are etymologically, that is, from their very roots or terms, different.
• The word moral(s) is derived from the Latin root moralis, which implies custom.
• In other words, it refers to a behaviour that is accepted or rejected due to an accepted social custom.
• The word ethics stems from the Greek word ethikos, which attributes to a social environment, referred to as ethos or social milieu.
• This latter meaning embraces much more than mere custom.

It refers to everything that is part and parcel of society and not just what is allowed or forbidden.
Morality is more concerned with the norms, values, and beliefs embedded in social processes which define what is right or wrong for an individual or community.

Another point of difference between the two refers to their usage in ordinary language. For instance, a lawyer defending an alleged rapist would accuse the victim as ‘morality fallen’ and not as ‘ethically fallen’.

On the other hand, a committee that is formed to probe the behavior of the members of Parliament would be called ‘ethics committee’, not a ‘moral committee’.

The meaning of the word is in its usage.
Thus, both these terms have their unique characteristics and applications.

(b) (i) Social conduct has evolved along with the evolution of society.

• When your elders tell you ‘Do not cheat’, they are referring to a social code of conduct. Social conduct has developed in society over hundreds of years.
• The codes of conduct have been passed down from generation to generation, and there is a pattern to the evolution of such codes.
• Acceptable behaviour is promoted and elevated as a social value, and unacceptable behaviour is rejected and condemned.
• In ancient India, there was no moral problem with the custom of sati-immolating the wife on the funeral pyre or the deceased husband.
• But society has evolved humanely and has condemned the act as unacceptable and morally reprehensible.

The laws of a country are based on the customs or moral codes of its society. Penalties are prescribed for bad actions, actions that contradict the established laws.

The laws are a measure against those people who cross the limits of the code of social conduct, and ensure that good citizens are protected from the negative consequences of the law-breakers.

(c) (i) The success of the business depends very much on fairness and honesty in the business. Fairness and honesty are at the heart of the business ethics and relate to the general values of decision-makers. At a minimum, business professionals and persons are expected to follow all applicable laws and regulation.

even then, they are expected not to harm customers, employees, clients or competitors knowingly through deception, or misrepresentation. coercion or discrimination. One aspect of fairness and honesty is related to disclosure of potential harm caused by product use.

Another aspect of fairness relates to competition. Although numerous laws have been passed to foster competition and make monopolistic practices illegal, companies sometimes gain control over markets by using questionable practices that harm competition.

Rivals of Microsoft, for example, accused the software giants of using unfair and monopolistic practices to maintain market dominance with its Internet Explorer browser. These aforementioned examples show that fairness and honesty pay in the long run; they secure the stability of the business and overall reputation in the business world. Therefore, we may say that fairness and honesty are the pillars of success in the business.

Question 22.
Answer the question:
What is ‘Business Ethics’? (June 2016, 7 marks)
Answer:
Business Ethics:
According to Andrew Crane,” Business Ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed.” Raymond C. Baumhart contends – “The ethics of business is the ethics of responsibility. The businessman must promise that he will not harm knowingly”.

Thus, Business Ethics (also called Corporate Ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and the entire organizations.

Business ethics concerns itself with adhering to the social principles of the situations in which business takes place. The analysis of this definition leads us to the following discussion.

Thus, Business Ethics (also called Corporate Ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and the entire organizations.

It deals with morality in business environment, It involves moral judgment based on understanding of the society. It extends beyond the legal questions and involves moral judgment based on understanding of the society. It extends beyond the legal questions and involves goodness and badness of an Act.

1. Business ethics refers to the application of everyday moral or ethical norms to business. It requires an awareness of how the products and services of an organizations and the action of its employees, can affect its stakeholders and society as a whole, either positively or negatively.

2. Ethics in business organization relates to a corporate culture of values, leadership programs and enforcement.

3. It is that set of principles or reasons which governs the conduct of business at the individual or collective level by the application of ethical reasoning to specific business situations and activities.

Question 23.
Answer the question:
Explain in brief the measures to ensure ethics in the workplace. (Dec 2016, 8 marks)
Answer: .
An ethical company may develop certain basic principles which will guide its employees in dealing with ethical issues at the workplace. 4 set of such principles is given below:
1. Codes of ethics and conduct
A code of ethics specifies the company’s rules regarding ethical behavior in the workplace. For e.g., company’s code may prohibit employees from accepting gifts from suppliers and clients. Code becomes more effective when the top management actively supports and applies it.

2. Establish open communication
Most ethical issues in business are ambiguous and uncertain. Therefore, there is need to create work environment in which employees feel free to discuss ethical dilemmas. Management should explain the purpose and contents of ethical policy. Training is required to sensitize employees to potential ethical issues. Necessary resources and support need to be provided to help employees to resolve ethical dilemmas.

3. Appoint an ombudsman
The ombudsman serves as a point of reference. Employees can go to him and discuss ethical issues in confidence.

4. Leadership by example
Ethical behavior is best taught by example. A father who insults his parents cannot expect respect from his children. Top management should themselves follow ethical practices and also create an impression that unethical behavior will not be tolerated.

5. Integrate ethics management with other management practices
When developing the values statement during strategic planning, ethical values should be preferred in the workplace. When developing personnel policies, reflect on what ethical value, you’d like to be most prominent in the organization’s culture and then design policies to produce these behaviours.

6. Group decision making
If ethical issues are decided in groups, diverse interests and perspectives can be considered. The decision process becomes more acceptable.

7. Suggestion system
A suggestion box may be installed so that employees may report suspended unethical activities in an anonymous manner. This will encourage employees to report ethical violations.

8. Grievance procedure
An appropriate grievance redressal system may be created. This will help to resolve disagreements between employees and their supervisors on ethical issues.

9. Regularly update policies and procedure
Policies and procedures concerning ethics at the workplace need to be reviewed and updated on regular basis.

Question 24.
What are the standards of ethical conduct for practitioners fixed by the ICAI? (June 2017, 10 marks)
Answer:
ICAI has promulgated the following standards of ethical conduct for practitioners:
maintain at all times independence of thought and action; not to express an opinion on cost/financial reports or statements without first assessing her or his relationship with her or his client to determine whether such Member might expect her or his opinion to be considered independent, objective, and unbiased by one who has knowledge of all the facts; and

when preparing cost / financial reports or statements or expressing an opinion on cost I financial reports or statements, disclose all material facts known to such member in order not to make such cost / financial reports or statements misleading, acquire sufficient information to warrant an expression of opinion and report all material misstatements or departures from generally accepted accounting principles.

not to disclose or use any confidential information concerning the affairs of such Member’s employer or client unless acting in the course of his or her duties or except when such information is required to be disclosed in the course of any defense of himself or herself or any associate or employee in any lawsuit or other legal proceeding or against alleged professional misconduct by order of lawful authority or any committee of the Society in the proper exercise of their duties but only to the extent necessary for such purpose;

inform his or her employer or client of any business connections or interests of which such Member’s employer or client would reasonably expect to be informed;

not, in the course of exercising his or her duties on behalf of such Member’s employer or client, hold, receive, bargain for or acquire any fee, remuneration or benefit without such employer’s or client’s knowledge and consent; and

take all reasonable steps, in arranging any engagement as a consultant, to establish a clear understanding of the scope and objectives of the work before it is commenced and will furnish the client with an estimate of cost, preferably before the engagement is commenced, but in any event as soon as possible thereafter.

conduct himself or herself toward other Members with courtesy and good faith;
not to accept any engagement to review the work of another member for the same employer except with the knowledge of that member, or except where the connection of that member with the work has been terminated unless the member reviews the work of others as a normal part of his or her responsibilities;

not to attempt to gain an advantage over other members by paying or accepting a commission ri securing management accounting work; not to act maliciously or in any other way which may adversely reflect on the public or professional reputation or business of another member;

at all times maintain the standards of competence expressed by the Institute from time to time; undertake only such work as he or she is competent to perform by virtue of his or her training and experience and will, where it would be in the best interests of an employer or client, engage, or advise the employer or client to engage, other specialists;

Question 25.
Why business ethics is more important and immensely needed in the present business environment? Discuss. (Dec 2017, 10 marks)
Answer:
Importance of. Ethics

• Public expects business to exhibit high levels of ethical performance and social responsibility;
• Encouraging business firms and their employees to behave ethically is to prevent harm to society;
• Promoting ethical behavior is to protect businesses from abuse by unethical employees or unethical competitors;
• High ethical performance also protects the individuals who work in business.

Need for business ethics
The following points discuss the need and importance of business ethics to stop business malpractice;

• to improve customers’ confidence;
• for the survival of business;
• to safeguard consumers’ rights;
• to protect employees and shareholders;
• to develop good relations;
• to create good image;
• for smooth functioning;
• consumer movement;
• consumer satisfaction;
• importance of labour;
• healthy competition.

Question 26.
What are the areas in business ethics? Write a note of the same. (June 2018, 10 marks)
Answer:
Areas in business ethics:

• Corporate Social Responsibility;
• Fiduciary responsibility to stakeholders;
• Industrial espionage.
• Ethical behavior and corporate social responsibility can bring significant benefits to a business.

For example, they may:

• attract customers to the firm’s products, which means boosting sales and profits
• make employees want to stay with the business, reduces labor turnover and therefore increases productivity.
• attract more employees wanting to work for the business, reduce recruitment costs, and enable the company to get the most talented employees.
• attract investors and keep the company’s share price high, thereby protecting the business from takeover.

Knowing that the company, they deal with, has stated their morals and made a promise to work in an ethical and responsible manner allows investors peace of mind that their money is being used in a way that arranges with their own moral standing. When working for a company with strong business ethics, employees are comfortable in the knowledge that they are not by their own action allowing unethical practices to continue. Customers are at ease buying products or services from a company they know to source their materials and labor in an ethical and responsible way.

A company which sets out to work within its own ethical guidelines is also less at risk of being fined for poor behavior, and less likely to find themselves in breach of one of a large number of laws concerning required behaviour.

Reputation is one of a company’s most important assets, and one of ho most difficult to rebuild should not be lost. Maintaining the promises it is made is crucial to maintaining that reputation. Businesses not following any kind of ethical code or carrying out their social responsibility leads to wider consequences. Unethical behavior may damage a firm’s reputation and make it less appealing to stakeholders. This means that profits could fall as a result.

The natural world can be affected by a lack of business ethics. For example, a business which does not show care for where it disposes its waste products or fails to take a long-term view when buying up land for development is damaging the world in which every human being lives, and damaging the future prospects of all companies.

Question 27.
Discuss the nature and relevance of Ethics to the Business. (Dec 2018, 10 marks)
Answer:
Ethics – Nature and relevance to the business Several factors play a role in the success of a company that is beyond the scope of financial statements alone. Organizational culture, management philosophy, and ethics in business each have an impact on how well a business performs in the long term.

No matter the size, industry or level or profitability of an organization, business ethics are one of the most important aspects of long-term success

The management team sets the tone for how the entire company runs on a day-to-day basis. When the prevailing management philosophy is based on ethical practices and behavior, leaders within an organization can direct employees by example and guide them in making decisions that are not only beneficial to them as individuals but also to the organization as a whole.

Building on a foundation of ethical behaviour helps create long-lasting positive effects for a company, including the ability to attract and retain highly talented individuals and building and maintaining a positive reputation within the community.

Running a business in an ethical manner from the top down builds a stronger bond between individuals on the management team, further creating stability within the company.

When management is leading an organization in an ethical manner, employees follow in those footsteps.

Employees make better decisions in less time with business ethics as a guiding principle; this increases productivity and overall employee morale.

When employees complete work in a way that is based on honesty and integrity, the whole organization benefits.

Employees who work for a corporation that demands a high standard of business ethics in all facets of operations are more likely to perform their job duties at a higher level and are also more inclined to stay loyal to that organization.

The importance of business ethics reaches far beyond employee loyalty and morale or the strength of a management team bond.

As with all business initiatives, the ethical operation of a company is directly related to profitability in both the short and long term.

The reputation of a business from the surrounding community, other businesses and individual investors is paramount in determining whether a company is a worthwhile investment.

If a company’s reputation is less than perfect based on the perception that it does not operate ethically, investors are less inclined to buy stock or otherwise support its operations.

With consistent ethical behaviour comes increasingly positive public image. and there are few other considerations as important to potential investors and current shareholders.

To retain a positive image, businesses must be committed to operating on an ethical foundation as ¡t relates to treatment of employees, respect to the surrounding environment and fair market practices in terms of price and consumer treatment.

Question 28.
‘Ethics is the first line of defense against corruption, while law enforcement is remedial and reactive. However, both fail to achieve the desired aim in the Indian set-up.” Do you agree? Give reasons in support of your answer. (June 2019, 10 marks)
Answer:
It is, absolutely correct to say that ethics is the first line of defense against corruption. What prevents corruption in. the first place ¡s ethics. The enforcement of law is a reaction to the occurrence of the corruption.

While the law can only lay down the do’s and don’ts and the consequences of doing or not doing something.

The compliance to law ¡n letter and spirit can be achieved only through ethical practices being followed. An act may be perfectly legal ‘but totally unethical. Therefore, the statement law enforcement is remedial and reactive is also true.

However, ethics ¡s not absolute and ¡s open to the influence of time, place, and situation. Certain unethical practice on account of the fact that widely prevalent is apparently justified.

The following are some of the factors that have contributed to the prevalence of corruption in India:

• Cultural ethos: Putting a premium on materialism, profiteering, power play, and casual attitude for ethical value …. Myopic concern overriding long-term considerations and values.
• Institutional failures: Procedural formalities in-built obstacles, bureaucratic red-tapism, etc.
• Poor enforcement of law: delay injustice.
• Erosion of values in politicians, entrepreneurs political lobbying etc.

Question 29.
What is Value Chain? What are the new themes and challenges that managers face currently? (Dec 2019, 9 marks)
Answer:
Value chain is a visualization of complete business as a sequence of activities in which usefulness is added to the products or services produced and sold by an organization. Management accountants provide decision support for managers in each activity of value chain.

The design of management accounting system has to take into consideration the decision needs of the managers. Also it has to take into consideration the new themes and challenges that managers face currently.

• Customer focus: The challenge for managers it invest sufficient resources to enhance customer satisfaction. But every action of the organization has to result enhanced profitability or maintained profitability for the organization.
• Key Success Factors: These are nonfinancial factors which have an effect on the economic viability of the organization. Cost, quality, time, and innovation are important key success factors.
• Continuous Improvement: Continuous improvement or kaizen is a popular theme. Innovation related to this area in costing is kaizen costing.
• Value Chain and Supply Chain Analysis: Value chain as a strategic framework for analysis of competitive advantage was promoted by Michael Porter.

Question 30.
Discuss the importance of ethics. (Dec 2021, 6 marks)
Answer:
Importance of ethics.

• Ethics is a requirement for human life.
• It is our means of deciding a course of action.
• Without it, our actions would be random and aimless.
• There would be no way to work towards a goal because there would be no way to pick between a limitless number of goals.
• Even with an ethical standard, we may be unable to pursue our goals with the possibility of success.

no the degree which a rational ethical standard is taken, we are able to correctly organize our goals and actions to accomplish our most important values.

Any flaw in our ethics will reduce our ability to be successful in our endeavors.

A proper foundation of ethics requires a standard of value to which all goals and actions can be compared to.

This standard is our own lives, and the happiness which makes them livable. This is our ultimate standard of value, the goal in which an ethical man must always aim. It is arrived at by an examination of man’s nature, and recognizing his peculiar needs.

A system of ethics must further consist ot not only emergency situations but the day-to-day choices we make constantly.

It must include our relations to others, and recognize their importance not only to our physical survival but to our wellbeing and happiness.

It must recognize that our lives are an end in themselves, and that sacrifice is not only necessary but destructive.

Question 31.
What are the areas in business ethics? Write a note of the same. (Dec 2022, 10 marks)
Answer:

Repeatedly Asked Questions
Question	Frequency
1. Seven principles of public life 15 – June, 17 – June	2 Times
2. What are the areas in business ethics? Write a note of the same. 21 – Dec, 22 – Dec	2 Times
3. Improving ethical behaviour in business 18 – Dec, 22 – Dec	2 Times

Business Ethics And Emotional Intelligence CMA Inter Law, and Ethics Notes

1. Genesis of Ethics

• The question of what is right and what is wrong gave birth to ethical and unethical codes.
• The word “ethics” is derived from the Greek word “ethos” (character), which means “way of living” and from the Latin word “mores” (customs).
• Ethics ¡s a branch of philosophy that is concerned with human conduct.
• It studies what is morally right or wrong, just or unjust.
• It defines what is good for the individual and for the society.
• Ethics refers to well-based standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues.
• It is related to issues of propriety, rightness, and wrongness.
• What is wrong is unethical and what is right is ethical.
• If it is ethical, it is right, proper fair, and just.
• It is also defined as the science of the highest good.
• Mackenzie defines ethics as, “the study of what is right or good in human conduct or “the science of the ideal involved in human life”.

Applied ethics is the practice of ethics that aims to guide the moral judgement governing the decisions we make in all areas of our lives.
Values are our standards of right and wrong.

2. Background to Ethics
Ethics is the area of philosophy concerned with the evaluation of human conduct.

3. Major branches of ethics

• Metaethics
• Political ethics
• Normative ethics
• Virtue ethics
• Practical ethics
• Rule-based ethics.

(a) Meta-Ethics concerned with meaning of philosophical language, thus focus is on the grounds used to justify moral judgments rather than on making moral judgments.

(b) Political Ethics Consists of:

• examination of good society,
• the origins,
• forms of political power i.e. Government.

(c) Normative Ethics:

• It is a branch of philosophy.
• concerned with developing theories that determine which human actions are right or wrong.
• It is evaluative and constructive.
• It is not descriptive.
• e.g. – deontological ethics, utilitarian ethics, virtue ethics etc.

(d) Virtue Ethics:

• Viewed as a separate branch.
• It is certainly normative
• It is concerned with possessing moral traits and living a good life.

(e) Rule-based Ethics:
It seeks to evaluate moral considerations.
Rules are divided into 2 parts:

1. Consequentialism (or teleology) ⇒ under this it is claimed that action should be judged according to their consequences.
2. Deontology under this it is assumed that rightness or wrongness is a judgment not dependent on consequences but on the intrinsic goodness of action itself.

(f) Practical(or applied) Ethics:

• Applies ethical principles and theories to practical disciplines.
• Its purpose is to give guidance on a specific issue.
• e.g. – medical ethics, business ethics, environment ethics etc.

4. History of Business Ethics
Business Ethics has existed as an academic field since 1970s. Social responsibility has been described as being pyramid with four types of responsibilities:

• Philanthropic (top-level)
• Ethical
• Legal
• Economic (bottom level)

Business ethics is different from social ethics in following three ways:

1. Business ethics provide ethical framework for evaluating business.
2. It allows critical analysis of business and development of new and different methods.
3. It fuses personal and social responsibility together.
4. Thus, business ethics is broader than social ethics and is more systematic and constructive.

5. Business Ethics
It refers to application of ethics in business.

It facilitates and promotes:

• good to society,
• improves profitability,
• fosters business relations and
• employee productivity.
• Generally it means, coming to know what is right or wrong in the workplace and doing what’s right.
• Unethical practices are creating problems to businessmen and business units.
• Business ethics are developed by the passage of time and custom.
• If a custom is adopted and accepted by businessman and public, that custom will become an ethic.
• It is applicable to every type of business.
• It means the behaviour of a businessman while conducting a business, by observing moralîty in his business activities.
  According to Wheeler,
• “Business Ethics is an art and science for maintaining harmonious relationship with society, its various groups and institutions as well as recognizing the moral responsibility for the rigtness and wrongness of business conduct.

According to Rogene A. Buchholz,

• “Business Ethics refers to right or wrong behaviour in business decisions.
• Business Ethics or Ethical Standards are the principles, practices, and philosophies that guide the business people.
• It can be said to begin where the law ends.
• It is primarily concerned with those issues that are not covered by law, or where there is no definite consensus on whether something is right or wrong.

6. Importance of Business Ethics

• Good business ethics promote good business.
• It helps to understand why power and influence of business in society is increasing, what are is implications and how this issues is to be addressed.

It provides a major contribution to our societies like:

• producing the products
• providing services
• providing employment
• paying taxes, etc.
• It helps to create mutual trust and confidence in relationships by helping us understand various causes and consequences of business malpractices.
• It provides means to appreciate and understand the shareholder’s demand more clearly through which they are able to meet ethical expectations more effectively.
• It helps to improve ethical decision-making by providing managers with appropriate knowledge and tools.
• It helps the business to prosper by following good ethical standards.
• It provides us with the ability to assess the benefits and problems associated with different ways of managing ethics.
• Good ethical standards helps the business to face challenges.

7. Characteristics of Business Ethics

• They are the principles, which govern and guide business people to perform business functions and in that sense, it is a discipline.
• It is both a science and an art.
• It continuously test the rules and moral standards.
• It is dynamic in nature.
• It is based on theological principles like human welfare, good behaviour etc.
• It is based on reality and social customs prevailing in business environment.
• It studies activities, decisions and behaviour that are related to human beings.
• It has a universal application because business exists all over the world.
• Many ethical principles develop personal dignity.
• It keeps harmony between different roles of businessmen and every citizen, customer, owner, and investors.

8. Principles of Business Ethics

• Various principles are developed by Canif, J.S. Nul, Herbert Spencer, Plato, Thomas Garret, Woodrad, Wilson etc.
• Not to do any evil: Doing evil to oneself or to another, either as a means or an end, is unethical. Co-operation with others: Business should help others only if, other deserves help.
• Equivalent price: As per Wilson,
• People are entitled to get goods equivalent to value of money one pays”.
• Human dignity: Man should not be treated as a factor of production. Human dignity should be maintained.

Sacredness of means and ends: Means and techniques adopted to serve the business ends must be sacred and pure. Thus, good end should not be attained with wrong means even if beneficial to society.

Principle of proportionality: One should make a proper judgment before doing anything so that others do not suffer from any loss or risk of evil.

Publicity: As per W. Wilson,

• “Anything that is being done or to be done should be brought to the knowledge of everyone”. This way no unethical act can be done.
• Universal value: Business should be conducted on the basis of universal values.
• Non co-operation in evils: Business should not cooperate with anyone in any evil acts.

Nonviolence: If businessman hurts the interest or rights of the society or exploits its consumers by overlooking their interests, it is equivalent to violence and unethical act.

9. Elements of Business Ethics Key elements:

• Formal code of conduct
• Ethics committee
• Ethical communication
• An ethic office with ethical officers
• Ethics Training Programme
• A disciplinary system
• Establishing an ombudsperson
• Monitoring.

10. Ethics vs Morals
Gene rally, ethics and morals are used as synonyms. There is nothing wrong in such a usage, for after all, the meaning of all words depends on their common usage. However, in formal study, we need to understand the meaning of the terms in a qualified way so as to make our subject of study precise and well-defined.

11. Value-free Ethics
It would seem that business ¡s an ethically neutral or value-free activity. In other words, the only value business ¡s concerned with is the monetary value. It is not ¡n the interest of business to mix ethical values. An ancient Arabic wisdom states, ‘Live together like brothers and do business like strangers.’

Business should be kept free from other social relationships and obligations. The only successful relationship that exists in business is that of a vendor and a customer.

It is also said that ‘for the merchant, even honesty is a financial speculation.’ Indeed, for a businessman every factor in the business is measured in terms of money. The volatility that we see in the stock market is a clear example of the speculative nature of business, which is directly proportional to the prevailing attitude of the people.

12. Concept of Value-free Ethics
The concept of ‘value-free’ business ethics appears to be quite appealing to businessmen. It as though it may be pursued devoid of all rules within a social vacuum. The concept of value-free ethics found application in economics in a rather ironical fashion. Ludwig von Mises, known as the father of the Austrian School of Economics, proposed the pure theory of economics, stating that economic concepts are apriori, that is, they are not dependent on experience but are purely virtual concepts. The concept of choice, for instance, is a pure concept.

It is immaterial whether one chooses water or wine, but the concept in itself is free of such particular elements. Hence, choice is value-free (wertfrei). Applied to ethics, it would mean that we should be able to study the principles of this discipline, such as goodness, truth, justice, honour, etc. in their pure form.

13. Ethics as a Principle
We have established that social evolution has developed dot mite principles of civic behaviour, which have attained the status of principles. By principle, we understand that something proceeds and depends on it for its cause. For instance, when one kicks a football, force is the principle that propels it into motion and the ball remains ¡n motion till the force lasts. In other words, the physical world functions strictly according to the laws of physics. It is expected that people also submit their behavior both in thoughts and in actions, to these principles.

14. Business Ethics as Professional Code
Business ethics is not a pure science but a professional practice, and society expects businessmen to abide by the principles of a civil society, just as it expects professionals from other areas such as medicine, bureaucracy, politics, and sports to do so. Thus, instead of a value-free business ethics, we have a value-loaded or value-based business practice.

15. The Seven Principles of Public Life

• Selflessness: Holders of public office should make decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends.
• Integrity: Holders of public office should not place themselves under any financial or other obligation to outside individuals or organizations that might influence them in the performance or their official duties.
• Objective: In carrying out public business including making public appointments, awarding contracts, or recommending individuals to rewards and benefits, holders of public office should make choices on merit.
• accountability: Holders of public office are accountable for the decisions and actions to the public and must submit themselves whatever scrutiny is appropriate to their office.
• Openness: Holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wide public interest clearly demands.
• Honesty: Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve an conflicts arising in a way that protects the public interest.
• Leadership: Holders of public office should promote and support these principles by sound leadership and prove to be an example in whatever they perform.

16. The Relationship between Ethics and Law
Ethics and Law – The Interface: Law is essentially an institutionalization or codification of ethics into specific social rules, regulations, and prescriptions. Perhaps the best way of visualizing ethics and law is in terms of two intersecting drmàins as depicted Thus, in one sense, business ethics can be said to begin where law ends. Business ethics is primarily concerned with those issues not completely covered by law, or where there is no definite consensus on whether something is right or wrong. Hence, it is often remarked, that business ethics is about the “grey areas of business where values are in conflict.

17. Ethics in Business
“Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed”
(i) Business for Profit: It would seem that business ethics does not come within the confines of ethics. As Adam Smith (1779), the father of modern economics says: ‘People of the same trade seldom come together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.’ People find mechanisms to generate the highest possible returns when conducting business.

(ii) Business and Ethics: No matter how hard one tries, it is impossible to separate life from business. For a businessman, business is life. Mahatma Gandhi (1948) said, ‘It is difficult but not impossible to conduct strictly honest business. What is true is that honesty is incompatible with amassing of large fortune.’ The business world is an important part of society, as it is concerned with the livelihoods of people.

(iii) Character of Business: ‘There are two fools in every market: one asks too little, one asks too much,’ so says a Russian proverb. Is there a concept called balanced profit? The business in a society reflects its character Transparency International, in its corruption perception index, gives Finland, Denmark, and New Zealand the first place with 9.4 points. India is way down at 72, with just 3.5 points on a scale of 10.

We may gloat over, our cultural heritage and religious and ethical glories of the past, but we stand exposed before the world as a corrupt society.

Professional Ethics: The aforementioned discussion may be understood through the following distinctions: ethics and business ethics. We have studied the distinction between normative and practical ethics and have established that business ethics comes under practical ethics and is applied to a particular activity. Just as a society functions on the social codes of conduct and a country is governed by its constitution, a business is run on corporate codes. In other words, there is a professional code of conduct for any business.

18. Need for Business Ethics
1. Stop business malpractices: Sorne unscrupulous businessmen do business malpractices by indulging in unfair trade practices like black-marketing, artificial high pricing, adulteration, cheating in weights and measures, selling of duplicate and harmful products, hoarding, false claims or representations about their products etc.

2. Improve customers’ confidence: Business ethics are needed to improve the customers’ confidence about the quality, quantity, price, etc. of the products. The customers have more trust and confidence in the businessmen who follow ethical rules. They feel that such businessmen will not cheat them.

3. Survival of business: Business ethics are mandatory for the survival of business. The businessmen who do not follow it will have short-term success, but they will fail in the long run. This is because they can cheat a consumer only once. After that, the consumer will not buy goods from that businessman.

4. Safeguarding consumers’ rights: Consumer sovereignty cannot be either ruled out or denied. Business can survive so long it enjoys the patronage of consumer. The consumer has many rights such as right to health and safety, right to be informed, right to choose, right to be heard, right to redress, etc.

5. Protecting employees and shareholders: Business ethics are required to protect the interest of employees, shareholders, competitors, dealers, suppliers, etc. It protects them from exploitation through unfair trade practices.

6. Develop good relations: Business ethics are important to develop good and friendly relations between business and society. This will result in a regular supply of good quality goods and services at low prices to the society. It will also result in profits for the businesses thereby resulting in growth of economy.

7. Creates good image: Business ethics create a good image for the business and businessmen. If the businessmen follow all ethical rules, then they will be fully accepted and not criticised by the society.

8. Smooth functioning: If the business follows all the business ethics, then the employees, shareholders, consumers, dealers, and suppliers will all be happy. So they will give full cooperation to the business.

9. Consumer movement: Business ethics are gaining importance because of the growth of the consumer movement. Gone are the days when the consumer can be taken for ride by the unscrupulous business by their false propaganda and false claims, unfair trade practices.

10. Consumer satisfaction: Today, the consumer is the king of the market. Any business simply cannot survive without the consumers. Therefore, the main aim or objective of business is consumer
satisfaction.

11. Importance of labour: Labour, i.e. employees or workers play a very crucial role in the success of a business. Therefore, business must use business ethics while dealing with the employees. The business must give them proper wages and salaries and provide them with better working conditions.

12. Healthy Competition: The business must use business ethics while dealing with the competitors. They must have healthy competition with the competitors. Healthy competition brings about efficiency, breaks compliancy, and leads to optimal utilization of scarce resources, hence is always welcome.